Investors 'waiting' for Scottish independence guarantees

Renewable energy investors will not commit funds to projects in Scotland unless they have 100% guarantees of continuing subsidy support in the wake of Scottish independence, the Energy and Climate Change Committee (ECCC) was told today.

"If you don't have a 100% guarantee that the support mechanism will be acceptable, legally binding and in place for a couple of decades (after Scottish independence) then it will not be possible for investors to commit funds," said Citigroup Global Markets head of European utility sector research Peter Atherton.

Pointing out that both onshore and offshore wind projects were highly subsided at present, onshore attracting a £100 ROC support per MWh and onshore, half that amount, he said that the need for a guarantee that current UK support would continue in an independent Scotland was 'the most important' factor influencing current investors.

While stating that it would be perfectly possible for a future Scottish Government and a future rest-of-UK Government to reach a support guarantee agreement, the fact remained that it didn't exist at present. As a result, greater risk and uncertainly was attached to the sector at present.

Mr Atherton also told the committee that all the 'corporates' his company had spoken to in recent months, had said they would not progress with Scottish offshore wind projects until they gained the required certainty over future subsidies.

The session, which ran for 80 minutes, covered a broad range of additional issues, including the opinion that uncertainty over future investments in Scotland were being influenced as much by the lack of clarity over EMR and recent taxation changes as by the prospect of Scottish independence.

There was also comment that while onshore wind and biomass developments might be seen as attractive Scottish-based sources of renewable energy by a rest-of-UK Government, in the wake of a pro-independence vote, a different view could apply to the more expensive offshore wind and wave and tidal sectors. The conclusion, in relation to such areas, was that a rest-of-UK Government would be able to source its renewable energy more cheaply from elsewhere in Europe.